Efficient abatement in separated carbon markets: A theoretical and quantitative analysis of the EU emissions trading scheme

Sonja Peterson ()

No 1271, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The European Emissions Trading Scheme for CO2 established in 2005 is the world's largest emissions trading scheme. Since it covers only some sectors of the European economies it can nevertheless not ensure that the Kyoto targets are reached at minimal cost. This paper first analyzes the conditions for cost efficiency in the current separated carbon markets accounting also for the possibilities of purchasing international carbon credits from outside the EU. A computable general equilibrium model is then used to assess the cost efficiency of current EU climate strategies. Finally, based both on the theoretical as well as the quantitative analysis, recommendations are derived for a better allocation of the reduction burden between the sectors participating in emissions trading, those that do not participate and international carbon purchases.

Keywords: Allocation; Efficiency; Separated markets; Emissions trading (search for similar items in EconPapers)
JEL-codes: D58 D61 H21 Q48 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1271

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